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An oil leak off the coast of Newfoundland and Labrador could have disastrous consequences for this fragile, rugged coast

Gaze east from Signal Hill in St John's and there is nothing but the endless blue sea, whipped by a perpetually gusty wind.

To the people who live in this remote Canadian city, what matters is not the view, however. What will make or break their lives are the resources that are found below the choppy surface.

North America's oldest city has attracted pioneers and adventurers for centuries, chasing territory, fish and fortune. These days, many are here because of the oil.

The area off the coast of Newfoundland and Labrador is the only region in North America where deepwater exploration continues after a moratorium on offshore drilling was introduced off the coast of the US, resulting from the so far unstoppable leak from the BP rig in the Gulf of Mexico.

Local fears

That is a worry to many of the locals here, including taxi driver Bud Kennea.

Having grown up in a house on Signal Hill in the 1950s without modern facilities such as water and electricity, Mr Kennea has seen the city change and prosper over the years.

Traditional fisheries have given way to service and export industries and the city's port, formerly lined with wooden shacks and wharves, has been transformed.

Once dilapidated timber buildings have been restored by engineers and scientists who have flocked to the city, attracted by oceanic sectors - including the offshore oil and gas industry.

Mr Kennea realises that further wealth from the black gold could help elevate the city's fortunes further, but he is also very aware of how fragile the local environment is.

An oil leak off the rugged coast of Newfoundland and Labrador would be a disaster for sealife and bird life, as well as for the region's fisheries and tourism industries, he says, pointing to how a consortium of oil companies has started searching for oil just 430 kilometres (267 miles) off the coast here.

Blessing in disguise?

We would never allow such a thing to happen. Our policy, procedures, training, equipment are such that it will not happenMax Ruelokke, Canada-Newfoundland and Labrador Offshore Petroleum Board

On 9 May 2010, the Chevron-led consortium established a new record in Canada when it started drilling in the Orphan Basin at a water depth of 2,600 metres.

That is much deeper than the leaking BP well, which was drilled at depths of 1,500 metres.

The Lona O-55 well is set to run deeper into the seabed too. The oil is expected to be found 4,150 metres below the water's surface, compared with 4,000 metres in the Gulf.

Ever since the explosion on the BP rig in April that killed 11 people and caused the vast oil leak, environmentalists have been urging Newfoundland Premier Danny Williams to halt drilling here too.

As such, however damaging the leak has been to the marine environment in the Gulf, it could be "a blessing in disguise" if it leads to tighter controls and a pull-back from risky projects in the future, says one hopeful local who works as an environment warden on a nearby island.

Economic reliance

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Chevron's ship is the only vessel here that can reach depths of 2,600 metres

That seems unlikely to happen, however.

A moratorium on deepwater drilling could severely damage the region's economic development and curb spending on health, education and social programmes, Mr Williams has told the Newfoundland and Labrador House of Assembly.

In 2009, a 19% reduction in offshore oil production in the province resulted in an 8% reduction in real gross domestic product, according to Canada's ministry of finance.

This illustrates both the impact of a lack of new discoveries off the coast here in recent years, as well as the area's high hopes for future earnings from oil.

So instead of a ban on deepwater drilling, the naysayers have been given assurances.

"We believe that things that were done in the Gulf of Mexico were not in compliance with the existing regulations in the Gulf and probably not even in compliance with good oil field practice," Max Ruelokke, chief executive of the Canada-Newfoundland and Labrador Offshore Petroleum Board, which regulates oil activity here, told reporters earlier this month.

"We would never allow such a thing to happen. Our policy, procedures, training, equipment are such that it will not happen."

Tricky task

The US regulatory framework is stronger than Canada's and their response capacity dwarfs oursGerald Butts, WWF Canada

Such words of comfort have done little to mollify a group of local men enjoying a lunchtime beer on the wooden deck outside a bar in the lively George Street.

After all, one of them points out, it is not as if it is easy to operate in these waters.

"If it had been, why has it taken so long to try again after the previous attempt to drill in waters deeper than 2,000 metres failed?" he asks.

The Great Barasway F-66 well on the Orphan Basin, where drilling started in 2006, was abandoned in spring 2007 before any test runs had been undertaken after the operator apparently had experienced problems with the rig.

'Poorly prepared'

But fundamentally, this is not so much an argument about whether or not to trust assurances that nothing will go wrong.

Rather, the focus is now increasingly on whether or not the oil companies are able to cope in the event of a disaster, and on whether or not there is sufficient regulation to make sure they are well prepared.

Both authorities and the industry insists all is under control and Mr Williams has called for an independent investigation to verify this.

WWF Canada is not convinced.

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These remote communities rely on the sea to provide them with an income

"The US regulatory framework is stronger than Canada's and their response capacity dwarfs ours," insists Gerald Butts, president of the environmental pressure group.

"No matter, they could neither prevent nor contain a spill during a placid season in what is perhaps the best serviced marine environment on the planet.

"Canadians are plumbing some of the roughest, coldest and least serviced oceans on the planet: the North Atlantic and the Arctic."

So it seems unlikely that it would be easier to halt the flow from a leaking well here than in the Gulf, and it is quite possible that it would be even more difficult.

According to Canadian offshore analyst Ian Doig there are only two other rigs in Atlantic Canada and, in the event of a leak, neither has the capacity to drill emergency relief wells at such depth.

Getting a ship capable to drill a relief well to the Orphan Basin would take 11 days, weather permitting, and it could then take three months to drill a relief well, the Canada-Newfoundland and Labrador Offshore Petroleum Board acknowledges.

Hence, in the event of a sudden leak, Mr Doig told The Globe and Mail newspaper, "they'll just have to stand back and watch".